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Evaluation Of The And Modeling Approach

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2. Operations Research (OR)

Overview of the OR Modeling Approach

1. Carefully observing and formulating the problem, gathering all relevant data
- Crucial, because affects relevance of the conclusions (it’s difficult to extract a right answer from the wrong problem)

2. Constructing a mathematical model to abstract the essence of the real problem
- Decision variables: x1, x2, …, xn
- Objective function: P (profit) = 3x1 + 2x2 + … + 5xn
- Constraints: x1 + 3x1x2 + 2x2, ≤ 10 restrictions on the values to decision variables
- Parameters: the constants (namely, the coefficients and right-hand sides) in the constraints and objective function
- Sensitivity analysis: analysis of changes in the solution depending on the values of parameters,…show more content…
Testing the model and refine it as needed
- Retrospective test use historical data to determine how well the model and the resulting solution would have performed if they had been used, and using alternative solutions from the model on it predicts the relative effects of alternative courses of actions

6. Prepare for the ongoing application of the model as prescribed by management
- Databases and management information systems may provide up-to-date input for the model each time it is used, in which case interface programs are needed
- Decision support system is installed to help managers use data and models to support (rather than replace) their decision making as needed

7. Implementing the system
- Support of upper management (feedback)
- Training for personnel who will use the system

Introduction to Linear Programming

Graphical method (especially for two decision variables only, but also possible for three)
- feasible region is the region of the graphic where the solutions (considering the constraints) can be, that is, the set of permissible values for the decision variables

Standard Form of the Model
- there are functional constraints (or structural constraints) and non negativity constraints (or non-negativity conditions)
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